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Tax incentives for Research and Development

Innovation is now one of the main levers for gaining competitive advantage by responding to market needs. There are many schemes available to support research and innovation in companies, and to provide funding for their endeavours.

Many structures offer funding at a national level, but there are regional and country level funding organisations too, such as:

La Bpifrance (The French Public Investment Bank),

The Initiative Auvergne-Rhône-Alpes non-profit association

The Inovizi funding scheme

The professional credit institution SOMUDIMEC

The State

And the France Active investment company (SIFA).

Funding offered by these institutions comes in various forms. These include:

Companies with the status of jeune entreprise innovante or young innovative company (JEI) and jeune entreprise universitaire or young ‘university’ (academic research) company (JEU), are able to enjoy tax and social contribution exemptions as follows: income tax or corporation tax exemption (100% for one entire accounting year and over 50% exemption the following year), and exemption from economic territorial contributions (CFE and CVAE contributions) and local property tax for 7 years. Under certain conditions JEI’s can also obtain exemption for capital gains tax on selling shares and the immediate recovery of their research tax credit.

The research tax credit (CIR), provides generic support for R&D without any sector or company size limits. It takes the form of a deduction from taxes due by the company and the CIR is 30% for the first 100 million Euros of spending on research and development and 5% over that figure. The research tax credit is applied by calendar year. Companies exempt from corporation tax are excluded from this scheme, with the exception of young innovative companies or JEIs.

The tax credit for employment and competitiveness (CICE) is a tax scheme aimed at promoting the development of tax-paying companies with employees and is calculated and applied to the total gross compensation paid, i.e. the basic salary, overtime, benefits in kind, bonuses and holiday pay. The CICE amounts to 6% of the total gross compensation paid by a company.

The French Tech grant, which aims to support entrepreneurs with innovative projects is awarded in subsidy form and covers up to 70% of eligible forecast spending, capped at €30,000 to €45,000.

FIRA – INNOV’R aims to encourage ecologically innovative research and development projects and has a call for proposals that is permanently open to applications. It offers Prêt Feder Innovation loans at a zero percent rate for 5 to 8 years, with repayments delayed for up to a maximum of 3 years and it can cover up to 60% of eligible spending.

L’aide pour le développement de l’innovationis a scheme for SMEs and companies with under 2,000 employees that funds the development of innovations. It covers internal or external spending directly linked to the development of innovations.

Find out about all the funding possibilities for innovation in the Auvergne-Rhône-Alpes region now by clicking here!